Slimmed Down Energy Tax and Social Spending Package Targeted for Vote Before August
A slimmed-down version of the Build Back Better bill is reportedly in discussions between the Biden Administration and Senator Joe Manchin (D-W.Va). The Build Back Better bill has been stalled in Congress due to opposition by Senator Manchin. The new discussions come as welcomed news as the wind production tax credit is set to expire this year, and the solar investment tax credit continues to phase down. Current law also does not include tax incentives for stand-alone energy storage projects. Experts generally agree that prices for renewable energy development will increase absent legislative action.
According to the Washington Post, Senator Manchin has said that he would seek to bring the package to a vote prior to the August recess. Following the recess it becomes more difficult to move major legislation in advance of midterm elections
The bill is said to include an extension of the solar investment tax credits and wind production tax credits along with other clean energy provisions contained in the Build Back Better bill.
The most recent version of the Build Back Better bill includes $325 billion in new/expanded tax credits for the power sector. In addition to an extension of the ITC and PTC, the bill extends Carbon Capture and Sequestration Credit and includes a tax credit for stand-alone energy storage. The Build Back Better bill also expands the ITC to include geothermal, heat pumps, fuel cells, microturbines, microgrid controllers, combined heat and power (CHP), small wind, biogas, waste energy and offshore wind. Energy tax credits would additionally be made available for nuclear power production, green hydrogen, alternative fuel vehicle refueling property (such as EV charging stations), and high voltage transmission lines.
A direct payment option would also be made available to enable taxpayers to receive a cash payment equal to the credit value of the tax credit. The direct pay provision would thus allow tax-exempt entities such as public schools, religious institutions, municipalities and Indian tribes to access the tax credit in the form of a cash payment.
As part of the slimmed-down bill, Senator Manchin has indicated that he will seek concessions related to oil and gas drilling in the Gulf of Mexico and natural gas exports. The Biden Administration has already indicated plans to redirect liquefied natural gas (LNG) exports to Europe as part of a broader push to reduce Europe’ dependence on Russian energy in light of the Russian invasion of Ukraine.
E&E News reports that a text of the slimmed-down version of the bill is being circulated, although it is still at an early stage.
With the Senate’s attention currently occupied on confirming Judge Katanji Brown Jackson’s nomination to the US Supreme Court, the discussions with Manchin on enacting a bill before August containing Biden’s clean energy proposals comes as welcomed news.